International project financing for renewable energy in developing economies fell by 33% in the first half of 2026, extending pressure on funding for clean energy infrastructure as high capital costs and geopolitical uncertainty constrain investment, according to a report by the United Nations Conference on Trade and Development (UNCTAD).
The decline was significantly steeper than the 4% contraction recorded in developed economies, highlighting the widening difficulty developing countries face in attracting financing for renewable energy projects.
Globally, international project finance in renewable energy fell by a further 13% in the first half of 2026, following three consecutive years of contraction, UNCTAD said in its October 2026 Global Investment Trends Monitor.
Renewable energy continued to account for about two-thirds of total international project finance, making the sector’s decline a major factor behind the broader weakness in infrastructure investment.
The number of renewable energy project-finance deals in developing economies also declined by 32% in the first half of the year, while the total value of deals fell by $35 billion, according to the report.
The figures come as international project finance activity in developing economies continues to weaken. The number of deals across all sectors fell by 25%, marking the fourth consecutive year of decline. Their total value dropped by 7%.
UNCTAD attributed the continued contraction in international project finance to high capital costs and risks associated with economic and geopolitical uncertainty.
The report also found that domestic project financing weakened. The number and value of projects led by domestic sponsors fell by 30% in the first half of 2026, mainly because of a decline in renewable energy projects.
Domestic investors had helped fill the gap left by international financiers in 2025, but that trend did not continue during the first half of this year, the report said.
The slowdown is also reflected in broader investment activity linked to sustainable development. Investment activity in sectors related to the Sustainable Development Goals in developing countries fell by more than 25% in the first half of 2026, following a decline of about 5% in 2025.
UNCTAD said the decline in international project finance across these sectors was driven entirely by renewable energy, while activity in the remaining sectors remained broadly unchanged. Greenfield investment project announcements, however, declined across all SDG-related sectors.
The report’s findings point to continued pressure on the financing of renewable energy infrastructure in developing markets, where projects often depend on long-term financing and international capital.
UNCTAD said high financing costs, economic uncertainty and geopolitical risks continued to weigh on investment decisions during the first half of 2026.
